Inflation

The U.S. currency has surged sharply against its major peers since Trump's election on speculation that his tax-cut and tariff plans would fan inflation pressures.

Strong economic growth coupled with a solid labor market allows officials to wait for further evidence of cooling inflation before adjusting rates again. It also offers them time to evaluate President Donald Trump's policies.

By Tuesday's close, they were back well below the 5% mark, with the 30-year's lower on the day by six basis points to 4.80%.

Wednesday brings the next pivotal data point, with the release of the latest consumer-price figures, which are forecast to show inflation remains sticky.

The overall price drop was offset by interest payments, allowing a broad gauge of the Treasury market to post a gain of about 0.7% this year through Dec. 30.

Treasury yields remain near the upper end of their trading range for this year given the limited outlook for further interest rate cuts, along with concerns that rates will remain elevated because of the potentially inflationary policies being proposed by President-elect Donald Trump.

Investors have been demanding additional yield compensation, or term premium, for long-term Treasuries amid signs of sticky inflation.

Federal Reserve Gov. Christopher Waller, a Trump appointee, said that while recent inflation readings are concerning, monetary policy would remain restrictive even if the central bank cuts interest rates by another quarter-point this month.

Traders are pricing in 34 basis points worth of easing at the Fed's September gathering, trimming their expectations from a day earlier — and lowering the odds of a half-point cut at the next central bank meeting to about one-third.

The figures, to be published Wednesday by the Bureau of Labor Statistics, will probably show the consumer price index, and a "core" gauge excluding food and energy, both advanced 0.2% in July.